Oops! Home Prices Didn’t Crash After All

During the fourth quarter of last year, many housing experts predicted home prices were going to crash this year. Here are a few of those forecasts:

Jeremy Siegel, Russell E. Palmer Professor Emeritus of Finance at the Wharton School of Business:

“I expect housing prices fall 10% to 15%, and the housing prices are accelerating on the downside.”

Mark Zandi, Chief Economist at Moody’s Analytics:

“Buckle in. Assuming rates remain near their current 6.5% and the economy skirts recession, then national house prices will fall almost 10% peak-to-trough. Most of those declines will happen sooner rather than later. And house prices will fall 20% if there is a typical recession.”

Goldman Sachs:

“Housing is already cooling in the U.S., according to July data that was reported last week. As interest rates climb steadily higher, Goldman Sachs Research’s G-10 home price model suggests home prices will decline by around 5% to 10% from the peak in the U.S. . . . Economists at Goldman Sachs Research say there are risks that housing markets could decline more than their model suggests.”

The Bad News: It Rattled Consumer Confidence

These forecasts put doubt in the minds of many consumers about the strength of the residential real estate market. Evidence of this can be seen in the December Consumer Confidence Survey from Fannie Mae. It showed a larger percentage of Americans believed home prices would fall over the next 12 months than in any other December in the history of the survey (see graph below). That caused people to hesitate about their homebuying or selling plans as we entered the new year.

The Good News: Home Prices Never Crashed

However, home prices didn’t come crashing down and seem to be already rebounding from the minimal depreciation experienced over the last several months.

In a report just released, Goldman Sachs explained:

“The global housing market seems to be stabilizing faster than expected despite months of rising mortgage rates, according to Goldman Sachs Research. House prices are defying expectations and are rising in major economies such as the U.S.,. . . ”

Those claims from Goldman Sachs were verified by the release last week of two indexes on home prices: Case-Shiller and the FHFA. Here are the numbers each reported:

Home values seem to have turned the corner and are headed back up.

Bottom Line

When the forecasts of significant home price appreciation were made last fall, they were made with megaphones. Mass media outlets, industry newspapers, and podcasts all broadcasted the news of an eminent crash in prices.

Now, forecasters are saying the worst is over and it wasn’t anywhere near as bad as they originally projected. However, they are whispering the news instead of using megaphones. As real estate professionals, it is our responsibility – some may say duty – to correct this narrative in the minds of the American consumer.

Coldwell Banker Around the World: February 2022

A picturesque gem, surrounded by Gallo-Roman walls and towers (dating from the late 3rd Century CE), offering historic secrets and charms that many are not aware of? Welcome to Le Mans! You, too, could experience this real-life movie set and take in the unique history among the city walls.

Rich in history but always moving forward, the newest addition to Le Mans is Coldwell Banker Val Property, the newest franchisee to the Coldwell Banker France network. “Come visit our region for its incredible cultural heritage,” says Director of Coldwell Banker Val Property, Catherine Gourmelon. The beautiful old town flaunts a Roman legacy seen by the distinctive pink mortar and ochre sandstone wall around the city, as well as medieval houses with propped open doors, gorgeous courtyard gardens, paved streets, and museums to satisfy a range of interests. Perched along the beautiful River Sarthe and overlooked by the spectacular Cathedral of Saint-Julian, directors and film makers have long prized this destination as a period film set. You, too, could experience this real-life movie set and take in the unique history among the city walls.

Where do you live:   Coldwell Banker Val Property is located in Le Mans, the department of Sarthe in the region Pays de la Loire

What is the perfect weekend day like? Le Mans prides itself on having one of the best-preserved city walls found anywhere. Of the 1,300 meters of wall that originally surrounded the city, dating from the third and early fourth centuries A.D., more than 500-meters remain today in marvelous condition. The wall is significant in size and condition and is also remarkably recognized for its geometric decorations and the lovely hues of its ochre sandstone held together by pink mortar. Walk around and take in the beauty of our unique city. Le Mans offers a rare set of half-timbered houses, Renaissance mansions and cobbled streets of the period used as natural scenery for many films such as Cyrano de Bergerac by Jean Paul Rappeneau, Le Bossu by DE Brocca or Le Mans 66 with Matt Damon and Christian Bale. Be sure to visit the highlight of Le Mans, the Saint Julien Cathedral, and end the afternoon with a coffee at the Jacobins Market, one of the most beautiful markets in France!

What are the common modes of transportation there: Le Mans is at the heart of an excellent motorway and rail network. The city is 55 minutes by TGV (high-speed train) from Paris Montparnasse, 3 hours from Lyon and 3h 30m from Strasbourg.

Tell us about the foods your area is known for: “Les Rillettes” (pork pâté with a stringy appearance, seasoned with salt and pepper and slow cooked in its own fat), the world’s best cheese monger, Fabien Degoulet, and one of the best chocolate makers in France, “Bellanger”

What is your favorite meal? At home or at a restaurant: I truly enjoy having dinner at Auberge de Bagatelle, the Michelin-starred restaurant that serves unforgettable meals. Located in an old inn that’s been wonderfully renovated, Chef Jean-Sébastien Monné creates exquisite dishes.

Where do you recommend someone vacation in your region, why: Rent a boat and go up the Sarthe to explore the hidden villages, hike in the Mancelle Alps, or visit the Loire castles while tasting local wines

What is your favorite recreational or leisure time activity: It is fun to go see basketball games. Le Mans Sarthe Basket (MSB) is a basketball club playing in the first division. Many people also like golfing. Le Golf des 24 Heures is a 24-hour golf course affiliated to the French Golf Federation. An original competition takes place there every year too!

Share a little known but interesting fact about the area/region: The 24 Hours of Le Mans race is a 24-hour endurance car competition held in June (usually the 24^th week of the year) on the road circuit south of the city of Le Mans and on a section of the famous Bugatti circuit. This event exists since 1923 and is one of the 3 most prestigious races in the world with the Monaco Grand Prix and Indianapolis 500 miles, attracting more than 500,000 spectators from all over the world. Unlike fixed-distance races whose winner is determined by minimum time, the 24 Hours of Le Mans is won by the car that covers the greatest distance in 24 hours. Racing teams must balance the demands of speed with the cars’ ability to run for 24 hours without mechanical failure.

If you were to live in any other region where we have a Coldwell Banker presence, where would it be and why: If I lived anywhere else it would be Arcachon, France, as it is famous for its quiet beaches and delicious oysters.

Territory Summary:

Le Mans, city, capital of Sarthe département, Pays de la Loire région, northwestern France. Situated in the former province of Maine, the city lies southwest of Chartres at the confluence of the Sarthe and Huisne rivers. Le Mans derives its name from the ancient Gallic tribe of the Cenomani, whose capital it was. In the late 3^rd century CE, the Gallo-Romans surrounded the town with walls, parts of which still survive. Le Mans was mainly a market town for the agricultural products of the region until the mid-19^th century, when new industries developed and later expanded, principally producing railway, motorcar, and agricultural machinery; textiles; and tobacco. Every year, 24 Hours of Le Mans, probably the world’s best-known automobile race, is held at the Sarthe road-racing circuit just outside the city. Nearby there is a museum of early motorcars.

Key Facts:

• Population: 560,000 inhabitants in the Sarthe department / 3,790,000 inhabitants in the Loire region
• Language(s) Spoken: French
• Climate: Oceanic with Continental influence
• Currency: Euros

Industry Facts:

• Types of Architecture: 11^th Century houses, renaissance, 19^th Century with “Mancelle” type houses with slate roofs
• Price per sq. ft/meter: Approx 2000/m²
• Average years in house/apt: 7 years

Something else interesting? Le Mans is classified as the 6^th best area to live in France, 2^nd least stressful city in France, and the most advantageous area to invest (August 2021)

Email:  valproperty@coldwellbanker.fr

Sam Shalom

Sam is the Content and Multimedia Specialist for Coldwell Banker Real Estate. He is Jersey born and bred, and currently resides in Weehawken, NJ. He is an avid reader, loves Games of Thrones and is a New York Yankees die-hard.